The RIA industry is starting to look like a Presidents’ Day car lot: deals, deals, deals.

Last year marked a record period for M&A activity, with 322 transactions announced, an 18% increase year over year, according to DeVoe. While the surge reflects sustained interest in the space, it also underscores persistent challenges RIAs face, particularly around succession planning and organic growth. “When sellers were asked about the primary drivers behind their decision to sell, the top two responses were growth and liquidity,” company founder David DeVoe said.

What’s the Plan?

A looming wave of retirements is a major contributor, especially among owners who lack a clear transition strategy. “Succession remains one of the industry’s most significant unresolved risks,” DeVoe told Advisor Upside. Nearly two-thirds of firms report their next-generation talent is not yet ready to take over leadership, and roughly half of recent transactions involve founders moving toward retirement.

Growth pressures are driving a similar share of deals. Many RIAs hit a wall between $500 million and $3 billion in assets under management, said Joe Duran, managing partner of Rise Growth Partners. At that stage, firms face a choice: invest internally and absorb short-term margin pressure, or partner with an organization that already has the infrastructure in place. “Founders need to be brutally honest about what they’re trying to achieve,” Duran said in an email, adding that deals driven by fatigue, rather than strategy, often lead to regret.

The report also found:

• Wealth Enhancement, Merit Financial Advisors and Beacon Pointe were the top acquirers last year, conducting 17, 13 and 12 transactions, respectively.
• The number of sellers increased, but the buyer pool narrowed, dropping 19% from the previous year. Also, only 8% of acquirers last year were first-time buyers, down from 14% the previous year.
• Consolidators, serial acquirers with M&A as their core strategy, accounted for 51% of all RIA acquisitions, up from 45% in 2024.

Private Affair. Many of these buyers are backed by private equity, though plenty of RIAs have avoided the aggressive gut-and-flip strategies PE firms often deploy in industries like retail, media and healthcare. “In addition to the client value of the business model, RIAs provide consistent and growing revenue streams, resilient cash flow and long-duration client relationships,” DeVoe said.

Looking ahead, deals aren’t expected to slow, further underscoring the difficulties RIAs have with succession planning and growth. “Assuming general conditions remain consistent, we see M&A activity continuing to accelerate into 2026 and for several years to come,” he said.

Some investors love ETFs so much that they just can’t see themselves buying anything else.

About 62% of ETF investors can envision building an investment portfolio made up of just exchange-traded funds, according to a recent Schwab study, while 50% said they could be fully invested in ETFs within the next five years. As investors move into increasingly cheaper alternatives, the research highlights the diminishing role that mutual funds play in portfolios, as issuers introduce new strategies to keep up with advisor demand.

“From a time-sensitive point of view, you can buy an ETF at any time of day,” said Barry Martin, a portfolio manager at Shelton Capital Management. “There’s thematic ETFs, there’s growth ETFs. It seems like there’s more opportunities to specifically hit your clients’ needs in an ETF rather than a mutual fund.”

All In

The obvious appeal of all-ETF portfolios is that they will likely be cheaper than those constructed with mutual funds, despite the latter’s efforts to keep up. Another reason is investor life cycles: While investors nearing retirement age may want a more stable source of income, younger ones can generally take on more risk. These clients also have smaller amounts of investable assets and could initially opt for an ETF-only model portfolio. As they accumulate wealth, however, they might incorporate a separately managed account, Martin said. “The younger generation will be highly correlated with ETFs, but as they grow their account value, it’ll be broken down into other vehicles,” he added. “As someone progresses in life, they need to be more conservative, and with fixed-income products, that will naturally happen.”

There’s already evidence to suggest younger investors are more excited about ETFs than their pre-retiree counterparts. According to the Schwab study:

• Slightly less than half (49%) of newer ETF investors, defined as those who started investing in ETFs in the past five years, are millennials.
• Meanwhile, only 34% of “tenured” ETF investors, or those who started investing over five years ago, are millennials.

Choose Your Own (ETF) Adventure. An all-ETF portfolio also offers customization, and that’s driving traditional mutual fund firms to add ETF products, Martin said. His firm launched its first ETF in September. “It’s [in] the last three years that there’s been more of an awareness of using ETFs over mutual funds,” Martin said. “[ETFs’] popularity in the last few years, and inflows, show that.”

It’s too bad “AI” is so hard to CTRL-F, because investors will have to scan earnings reports for every mention this week — or maybe, they can just ask AI to do it.

As major tech companies tee up their earnings reports, shareholders will be looking to see whether massive investments in artificial intelligence have begun to generate returns. Companies spent hundreds of billions on AI last year, and Wall Street analysts expect that to rise further, with AI spending on track to break past $500 billion in 2026. Investors started feeling jittery about spending last fall as concerns about an AI bubble grew, and their fears haven’t dissipated so far.

Meta and Microsoft report on Wednesday (along with Tesla), and Apple follows on Thursday.

Spinning Round and Round

Heading into the big earnings week, Microsoft debuted its next generation of AI chips yesterday, which it said have 30% higher performance for the price than competing products. The new chip shows how tech companies are jockeying for position in the AI race, and increasingly, pushing into territory Nvidia has dominated. The new Maia 200 chip comes with a software tool called Triton that could rival Nvidia’s Cuda, a major selling point for Nvidia’s chips. Microsoft’s chip is also packed with SRAM, a type of memory that Cerebras Systems and Groq depend on.

While companies like Microsoft are competing with each other to win AI biz, they’re also depending on each other for profits from the AI biz in a circular-spending vortex:

• Who’s sourcing server power from whom for whose AI is an increasingly tangled web that even Charlie Day with a chalkboard would struggle to sort out. Take Meta: Earlier this month, it announced plans to build tens of gigawatts of AI power in the next decade and, eventually, hundreds. At the same time, Meta’s said to be sourcing power from several companies. It reportedly signed a $10 billion deal to tap into Google’s cloud network and a $20 billion deal with Oracle.
• On the front end, Apple’s expected to announce an updated Siri next month that uses Google’s Gemini AI models as part of a partnership the two tech giants confirmed earlier this month. Siri currently looks to ChatGPT for an AI boost, and it’s unclear what the new Google tie-up means for OpenAI.

Double-edged: The top tech companies are increasingly intertwined, which could make them vulnerable if AI turns out to be a bubble. If one bursts, it could set off the rest (picture: the exploding naval mines in “Finding Nemo”). On the other hand, if AI’s promise to boost productivity by creating workplace efficiencies translates to major cost-savings, the tech companies could spin high into the air together. Of course, they’ll be trying to knock each other down as they do so.